CILTSC02 – Inventory in the Supply Chain – Transport Forum

The term supply chain is often misunderstood and misused. By looking at the complete extent of the supply chain, we can see how important it is to plan effectively.

Inventory is categorised according to its use. We look at different types of inventory and how they impact of the supply chain.

Inventory has value. Every item of inventory that we own was purchased or produced in our factory and has cost associated with it. Understanding the monetary value of inventory helps us to appreciate why it is important to take care of it.

Inventory is purchased for a reason, either to support the manufacturing process or to have sufficient products to sell. We examine these reasons in detail.

Inventory has a monetary value to our business, and we should actively avoid having to dispose of, and therefore write-off, any inventory in our care

A Bill of Material is a recipe which tells us how to manufacture a product. The BOM tells us what components are needed to make our finished product and the accuracy of these is vitally important.

Inventory exists in every part of our supply chain, with our suppliers, with our distributors and in the retail stores. This lesson looks at how we measure all this inventory throughout the supply chain.

There are standards that we can use to measure how our inventory is performing. This helps us to manage our inventory levels better and monitor how much return we are getting on the money we spent to purchase or manufacture our products.